Accounting is the basic requirement of every business organization and setup. Without proper accounting measures, no setup or organization can make progress. Most of the time, entrepreneurs and people new to the business world think that they only have to calculate their expenses, pay to their vendors, and receive the payment from their clients. Accounting is not just limited to this.
In developed countries, like the United Arab Emirates, the business organizations and even new setups have to struggle hard for their survival. If they rely on a simple calculation of their expenses and managing their income, they cannot develop a competitive survival plan. There are numerous subfields of accounting, and organizations have to pay attention to each to soar higher.
Keep scrolling down this article to explore a comprehensive guide about different types of accounting.
Top 8 Types of Accounting Every Business Official Should Know
Accounting provides the necessary support to business organizations in managing their resources and assets. Therefore, accounting is divided into various types, keeping in view the different needs and requirements of the business organizations. Every type focuses on a certain feature and tries to provide a smooth solution to the organizations.
Here are the top types of accounting every business official should know about and follow to ensure the success of their setup.
1. Financial Accounting
Financial accounting is the basic and most crucial type of accounting used in every business organization. Financial accounting focuses on recording business transactions and compiling reports for external use. Managing balance sheets, cash flow statement and profit and loss statement falls in this category. Most organizations hire the best accounting firm in Dubai to manage their financial records efficiently, so they can win over investors through perfect reports.
2. Cost Accounting
Cost accounting is a common type of accounting, which focuses on calculating the cost incurred on production and distribution, as well as the receivables of productions. The main focus of this type of accounting is to better manage the costs while keeping the expenses low and ensure a rise in profitability.
3. Tax Accounting
Tax payment is one of the most important responsibilities of any business organization. Failure to do so can make the organization face fines, and penalties, in addition to earning a poor reputation. You cannot just pay a specific amount to the authorities when it is the tax season but have to plan and prepare it throughout the year. Tax accounting is the type that helps in managing, tracking and planning for tax payments, so you do not have to face fines or penalties.
Auditing accounting is one of the most crucial types of accounting, which focuses on checking the transparency of the accounting operations of any firm. There are two types of auditing. One is internal auditing, and the other is external accounting. Internal accounting mainly focuses on the accounting roles, responsibilities and their fulfillment in the organization. On the other hand, external auditing focuses on finding issues with the operationality of the organization.
5. Management Accounting
Managerial accounting is one of the most common types of accounting. In this type, the focus is on the provision of accounting data and reports for managerial purposes. In other words, this type of accounting provides reports and data to make important decisions like forecasting, budgeting, financial analysis, cost analysis, as well as reviewing the effectiveness of business decisions.
6. Project Accounting
Project accounting is a not so commonly used type of accounting. As the name suggests, this type of accounting is project-specific. The accounts have to manage and record all the accounting aspects of a particular project. They have to make the arrangements and ensure the success of the project.
7. Fiduciary Accounting
Fiduciary accounting is a unique type of accounting in which the accountants manage the property, accounts and transactions of any business organization or set up as a third party. The organization does not monitor the accounting department. However, the third-party accounting service provider has to share the accounting reports and records with all the insights on demand.
8. Forensic Accounting
Forensic accounting is one of the most important types of accounting, which focuses on recreating the missed accounting reports. If your business organization has lost some accounting data due to theft or some other accident, the forensic accountants can track your cash, credit, and debit transactions to redevelop the whole record. You can hire professionals from the best accounting firm in Dubai and get back your lost accounting records.
Utilize the types of accounting that fit your setup to boost profits!
Accounting plays a major role in making a business successful or turning it into a failure. If you want to ensure its success, you have to ensure the inclusion of all the important and relevant accounting types in your business. Get the professionals on board to make the assessment and arrangements instead of earning loss due to your lack of skills or knowledge.